Top Volkswagen Executives on Trial

The trial of former Volkswagen human resources executive Peter Hartz has ended on Friday, January 26. And the verdict? Hartz received a two-year suspended sentence and a fine. The bribery and corruption case of Peter Hartz was feasted on by journalists and camera teams with matching angry protesters outside the courthouse in the town of Braunschweig.

Peter Hartz was a former top manager of Volkswagen and a member of the IG Metall trade union and the Social Democratic Party (SPD). He was also a special advisor to Chancellor Gerhard Schröder (SPD). He devised the draconian labor market reforms that bear his name. During the trial Peter Hartz was called with various names such as traitor, scoundrel and most of the angry protesters were shouting for him to be put to jail.

Hartz trail was conducted in a rapid speed although he was charged with 44 criminal offenses; among them are bribery, undue influence and breach of fiduciary duty amounting to €2.6 million. His initial appearance inside the court only lasted an hour.

After a short deliberation, the chairman of the judges, Gerstin Dreyer , announced that the court has reached a prior agreement with all involved basing on the credible confession of Peter Hartz. He further declared that since Hartz has pleaded guilty on the charges and has confessed the whole truth, punishment would be reduced to a two-year suspended sentence and a fine of not less than €300,000. The said decision was ratified last Friday.

Volkswagen has also made it clear that it does not want details of the corruption involving the long standing works council Chairman Klaus Volkert and the other 23 works council members to be aired in open court. Lots of questions are still unanswered. The German public would like to know what Volkert do in return for receiving the questioned “special bonuses” amounting to €1.9 million between the years 1995 to 2005. Another mind-boggling question is the payment of €399,000 to Volkert’s Brazilian lover, what was it for?

“It would have been quite interesting to discuss in the courtroom, or possibly later before the High Court, the question whether the alleged bribing of a works council boss harmed or benefited the enterprise. Perhaps the money paid was worth it. Since every day of industrial peace is worth a great deal of cash,” wrote Hans Leyendecker in the Süddeutsche Zeitung.

Hartz Case an Eye-Opener

The scandal that happens in Volkswagen has resulted for the German public to doubt their country’s post war system of corporate governance. The felt cheated and betrayed. They also began questioning the system’s vulnerability to serious abuse. Under the system called codetermination, labor representatives are allowed by law to obtain half the seats on a company’s supervisory board which in turn gives them the opportunity to control management decisions.

As they say power corrupts. The system is not that perfect and so ending up being abused by those in power. Furthermore the chairman is also given an extra vote which gives him the power to tip the scales in votes resulting to the separation of labor and management. This type of system gives the shareholder representatives with the advantage especially in close boardroom battles.

And lastly the Hartz case has become an eye opener to the German public especially since never in their wildest dream did they ever think that such a distinguished man like Peter Hartz that authored Germany’s Labor reforms and who is renowned for hitting record breaking targets for exports year after year is involved in one of the country’s biggest plunder ever.

About Volkswagen

Volkswagen is a 20th century icon and unparalleled in terms of its production of legendary cars and quality auto parts like Volkswagen brake hose. The Beetle which is an original masterpiece of the German automaker has become the world’s best-selling car of all time. Volkswagen’s bus was also branded as a symbol of generation while the Golf was deemed by many as a modern masterpiece. All the mentioned vehicles manufactured by Volkswagen have become an indelible part of the cultural and personal lives of millions of people around the world.

Volkswagen was founded in an era where privilege is limited to a few number of people only. And this is exactly what motivates Ferdinand Porsche to come up with the idea of a people’s car or Volkswagen in German. It was in the year 1934 when Porsche created the first people’s car for Europe and a year later a working prototype was launched.

By the end of 1942, almost 70,000 Volkswagens were produced. Three years after in a swift recovery after the war, Volkswagen produced almost 2,000 vehicles for the Allied Forces and the new German Post Office. The year 1948 was another good year for Volkswagen; it was able to produce 25,000 Volkswagens from its production lines in Wolfsburg. Two Beetles were produced during this year and was shipped to United Sates. A year after another batch of Volkswagens was produced including Volkswagen Karrman convertible which became the best-selling convertible in the world.

The year 1955 has signaled the growth for Volkswagen since it was during this year that the automaker was able to produce a million Volkswagens. Since then it has grown into a world corporation, building factories and working communities in countries like United States, Brazil, and Canada. Volkswagen has not also forgotten to help its fellow countrymen; the German automaker has also put up working communities in major centres in Western Europe.

In less the last fifteen years of the millennium Volkswagen has become a true global force in the auto industry and ranked fourth as the largest automaker in the world following GM, Toyota and Ford. Its acquisition and redevelopment of famous car brands like Audi, SEAT, Skoda and Lamborghini has added to its strength.